The Turnbull government has confirmed that it plans to outsource the Medicare payment system. Reports suggest that planning is well advanced and will involve privatisation of services associated with Medicare, the Pharmaceutical Benefits Scheme, Veterans’ Affairs and others services including aged care.

News of the plan follows the government’s December announcement that it will cut $650 million from the health care budget by scaling back bulk-billing incentives for pathology and imaging services. In the last two budgets, cuts to public health funding are estimated to total nearly $800 million. That’s on top of funding changes announced in 2014 that leave states $50 billion worse off over 10 years.

In January, Victoria was advised by the federal health minister, Sussan Ley, that its funding allocation would be cut by $73 million. The state government says that this funding is the equivalent of 180,000 emergency room presentations.

According to the Community and Public Sector Union, up 10,000 public sector jobs could be slashed if the payment services are outsourced. Ley has insulted these workers, dubbing them “backroom bureaucrats”.

Interest in running the outsourced service reportedly has come from the major banks, Australia Post, Telstra, Serco, Fuji-Xerox and Accenture, among others.

The Medicare payment system is complex – changes that involve a less skilled workforce are likely to lead to errors. And private companies could be in a position to approve or deny access to public funding for health services.

Turnbull addressed criticisms of the plan by claiming that the government is simply seeking “a more efficient way of transacting”. Ley argues that the payment systems need to be modernised.

It is true that the current systems are outdated. The problem could easily be solved with a bit of extra funding – but that would be at odds with the government’s agenda. It has already commissioned a $5 million Department of Health taskforce to investigate the overhaul. Spending $5 million to get a handful health bureaucrats’ tick of approval for austerity is totally worth it, apparently.

This is just the thin edge of the wedge in the government’s agenda to privatise health care.